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Blink 3 of 8 - The 5 AM Club
by Robin Sharma
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Fair Pay Fair Play summary
Robin A. Ferracone
Aligning Executive Performance and Pay
11 mins
Brief summary
'Fair Pay Fair Play' by Robin A. Ferracone exposes the gender wage gap and proposes solutions for fair pay in the workplace, benefitting companies and employees alike.
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Fair Pay Fair Play
Summary of 5 key ideas
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Key idea 1 of 5
Executive compensation plans should take into account CEO performance and industry standards.
Imagine you’re an account manager on a team of three employees. Even though you all work equally diligently, you find out that your two colleagues are paid a higher salary than you.
Such a situation would be unfair, right?
Unfair pretty much explains the state of executive compensation today. Executives are routinely overcompensated, and compensation plans seldom take into account CEO performance.
Consider that John Chambers, the CEO of Cisco Systems – one of the world’s biggest telecom companies – each year “earned,” in addition to his $300,000 salary, from $5 million to $6 million worth of stock options and a $400,000 bonus.
That’s way too much money – no executive can perform that well! But performance isn’t all a compensation plan should consider to be fair. It also should reflect what other CEOs earn in the same market.
Industry standards vary, and each industry is subject to different external forces. For instance, the energy sector is sensitive to oil prices, while the tech industry reacts to inventory levels in the IT supply chain.
Such external factors are important, as they can affect the overall performance of any executive. That’s why it’s important for CEO pay to reflect the compensation of peers in the same industry.
This way, if an oil crisis drives prices through the roof, the CEO of an energy firm won’t be blamed for the company’s poor returns. Even if the CEO’s performance was above reproach, it wouldn’t make sense to base the executive’s compensation on that of technology CEOs working in a booming market.
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What is Fair Pay Fair Play about?
Fair Pay Fair Play (2010) sets out the basic principles of fair executive compensation. These blinks explain what goes into making compensation reasonable, why executives are often paid disproportionately higher salaries than other employees and which concrete strategies you can employ to set a fair pay scale for your company.
Fair Pay Fair Play Review
Fair Pay Fair Play (2021) is a book that tackles the topic of compensation and highlights the importance of establishing fair pay structures in organizations. Here are three reasons why this book is worth reading:
- Offers practical strategies for creating fair pay systems that benefit both individuals and organizations.
- Presents compelling case studies that demonstrate the impact of fair pay on employee motivation, productivity, and overall business success.
- Explores the ethical and moral implications of pay inequality, prompting readers to reflect on the broader ramifications of unfair compensation.
Who should read Fair Pay Fair Play?
- Human relations (HR) professionals
- Entrepreneurs and CEOs
- Anyone interested in the rules of executive compensation
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Fair Pay Fair Play FAQs
What is the main message of Fair Pay Fair Play?
The main message of Fair Pay Fair Play is the importance of pay fairness and transparency in the workplace.
How long does it take to read Fair Pay Fair Play?
The reading time for Fair Pay Fair Play varies depending on the reader's speed. However, the Blinkist summary can be read in just 15 minutes.
Is Fair Pay Fair Play a good book? Is it worth reading?
Fair Pay Fair Play is a thought-provoking read that sheds light on the importance of fair pay. It offers valuable insights for professionals and organizations.
Who is the author of Fair Pay Fair Play?
The author of Fair Pay Fair Play is Robin A. Ferracone.
What to read after Fair Pay Fair Play?
If you're wondering what to read next after Fair Pay Fair Play, here are some recommendations we suggest:
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- Every Nation For Itself by Ian Bremmer
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- Fashionable Nonsense by Alan Sokal and Jean Bricmont
- Yoga Nidra Made Easy by Uma Dinsmore-Tuli & Nirlipta Tuli
- Judgement at Work by Andrew Likierman
- Atomic Habits by James Clear
- Who Better Than You? by Will Packer
- Superagency by Reid Hoffman